Credit bureaus are starting to use social media sites like Facebook (NASDAQ:FB) to verify consumers’ identities and assess consumers’ credit as people continue to swap privacy for ease in online shopping transactions and cultivating a social media presence.
Equifax Inc. (NYSE:EFX), eBay Inc.‘s (NASDAQ:EBAY) PayPal, and Inuit Inc. (NASDAQ:INTU) are among the companies looking to start using consumers’ social media profiles to help determine whether consumers are lying about their finances and to detect fraud. CyberSource Corp. estimates that fraudulent purchases cost online retailers in the U.S. $3.5 billion last year, and social media has proved useful for sniffing out fraud and validating identity.
Companies can only see information that social media users choose to make public, but that still provides them with a huge amount of data. People share personal information through Facebook, Twitter Inc., Pinterest Inc., and LinkedIn Corp. (NYSE:LNKD) every day, and that data can include everything from recent purchases to locations a person has visited.
Credit bureaus are looking to start using this vast field of data — which includes photo tags, locations that a person has checked in to, and a person’s network of Facebook friends — to determine if consumers are who they say they are. Credit bureaus like Equifax and Experian PLC, and payment processing companies like Intuit, Braintree Payment Solutions LLC, and WePay Inc. are all interested in harvesting information from social media.
While this information can help businesses identify scams and fraud, it also raises privacy concerns among those who believe social media sites don’t do enough to protect their users’ identities. Government organizations including the U.S. Consumer Financial Protection Bureau and Federal Trade Commission have begun to investigate how creditors use social media to pursue debtors.